Health insurers rake in record profits as consumers foot the bill

MedTech & Diagnostics News: The Australian Prudential Regulation Authority (APRA) has unveiled its Quarterly Private Health Insurance Membership and Benefits Summary for June 2024, offering a snapshot of the private health insurance landscape in Australia.

As of June 30, 12.24 million Australians – 44.8% of the population – held hospital treatment cover, marking a slight decline from March 2024. However, the June quarter saw an increase of 63,976 insured individuals compared to the previous quarter.

Amid this backdrop, the Medical Technology Association of Australia (MTAA) has sharply criticised the corporate health insurance industry for profiteering during the ongoing cost-of-living crisis.

APRA’s data reveals that corporate health insurers have seen their after-tax profits surge by 34% to a record $2.13 billion for the year ending March 2024. This stands in stark contrast to the decreasing proportion of premiums returned to customers, which fell from 88.03% in 2019-20 to 82.61% in 2022-23, well below the gold standard of a 90% return.

Furthermore, corporate health insurers have increased their ‘management expenses’ – including executive bonuses, salaries, and marketing – by 19%, from $2.82 billion to $3.45 billion in the same period.

Dr Katharine Bassett, Catholic Health Australia’s Director of Health Policy, said “The private health insurance sector is enjoying record profits and needs to collaborate with the non-government health sector to deliver sustainable funding arrangements that serve the needs of our patients, communities, clinicians, and service providers.”

Claims by Private Healthcare Australia (PHA), the corporate health insurer lobby group, that the Prescribed List (PL) is driving up premiums have been refuted by the medtech sector.

Analysis indicates that the average benefit payments for the PL for medical devices have actually decreased by 17% since 2016. APRA’s data shows that the medtech industry has generated over $2.5 billion in savings for health insurers since 2017 – savings that have yet to be fully passed on to consumers.

MTAA CEO Ian Burgess has condemned the corporate health insurance lobby’s attempts to shift blame for rising premiums, pointing to Medibank’s expense management as a model for how insurers could alleviate pressures by reducing their own expenditures.

“There is almost $1 billion worth of savings insurers could be delivering to consumers if the rest of the health insurance industry followed Medibank’s management expenses ratio,” Burgess said.

“Unfortunately, the facts and the analysis show where the money is really going – into health insurers’ own pockets.”

In reimagining healthcare across the entire patient journey, Health Industry Hub^TM is the only one-stop-hub uniting the diversity of the Pharma, MedTech, Diagnostics & Biotech sectors to inspire meaningful change.

The Health Industry Hub^TM content is copyright protected. Access is available under individual user licenses. Please click here to subscribe and visit T&Cs here.